Casino operator Caesars Entertainment is paving the way to place its operating unit into bankruptcy in 2015 after reaching an agreement with two senior creditors.
It was confirmed by Caesars on Monday that it was declining to pay a $225m interest payment that is owed to second-lien creditors, meaning that it would be in default of its debt obligations in 30 days' time.
Bloomberg reported on Friday that a meeting had taken place between Caesars and its most senior bondholders, where it was decided that Caesars will place its subsidiary Caesars Entertainment Operating Co. (CEOC) into bankruptcy by 15 January, providing that conditions are met.
The deal would cut Caesars’ annual interest payments by 75% to $450m and would reduce CEOC’s current debt by $10bn.
Caesars Entertainment has also agreed to acquire affiliate Caesars Acquisition Co. in a stock-for-stock merger that will better position the $18.4bn debt load of CEOC, according to The Wall Street Journal.